Strategic Management Report on Toyota PDF

Strategic Management Report on Toyota
Toyota Motor Corporation (Toyota) is the largest producer of automobiles in Japan
and the world’s second largest automotive manufacturer based on production and
sales. In 2010, Toyota sold 7.24 million units (Toyota, 2010). Toyota diversified
operations include financial services, telecommunications, prefabricated housing and
leisure boats.
Besides its 12 plants and a number of manufacturing subsidiaries and affiliates in
Japan, Toyota has 52 manufacturing companies in 27 countries that produce Lexus
and Toyota brand vehicles and components. Toyota employs approximately 320,590
people worldwide, and markets vehicles in more than 170 countries. The company is
headquartered in Tokyo, Japan and had an operating income of approximately
397.05 billion Yen (Toyota, 2011). And the main competitors of Toyota are General
Motors, Honda Motors and Ford Motors (Daily Finance, 2011).
3. Analysis of Toyota Strategic Capabilities:
3.1 Company Capabilities –
Grant (2010) says about Lean production – integrates capabilities relating to the
manufacture of components and subassemblies, supply chain management,
production scheduling, assembly, quality control procedures, systems for managing
innovation and continuous improvement and inventory control.
3.1.1 Resources –
Innovation has always been a Toyota resource. In the 1970s Toyota began to
produce smaller, more fuel-efficient cars, which customers desired after oil prices
rocketed. Recently, it has used both diesel technology and the electric car.
3.1.2 Organizational Culture –
However, Toyota’s main resource is the Toyota Way, the 14 principles behind the
Toyota Production System (Combe, 2011). These originated in the post 1945
environment, when it was imperative to make the maximum use of scarce resources.
Challenges, improvement, Kaisen, go and see (genchi genbutsu); respect and
teamwork are the main tenets of these principles, which can be outlines as follows.
Management decisions should be long term, as opposed to short term, although
they should be arrived at consensually. Problems should be highlighted by
continuous process, not hidden and resolved immediately so that a quality product is
produced immediately. Only existing and trustworthy technology should be used and
tasks need to be standardized so that the workload is leveled out and the workers

are continually improving. Management should understand all aspects of the
company’s operations, and pass on their dedication to the company’s goals to
others.
All workers, suppliers and affiliated should always be challenged to improve their
performance. The latter means that Toyota becomes a leaning organization with
workers being empowered to make changes as they perform their daily tasks. The
Toyota Way has given Toyota a comparative advantage in both quality and reliability.
3.1.3 Supply Chain –
According to Winfield and Hay (1997) part of the strategic capabilities of Toyota
includes the strategic capabilities of the supply chain. The pattern and organization
of a supply chain is perceptibly a comprehensive topic, concerning inter
dependencies between research and development, marketing and production roles,
creating considerable courses of goods and technical, market and financial
information.
3.2 Core Competencies –
Toyota’s global competitive advantage is to build trust and confidence with
customers by delivering outstanding quality products and services that add real
value to their business.
According to Drejer (2002),
However, in recent years there has been a number of recalls of multiple models of
Toyota, which are amazingly reliable. How could this possibly happen to the car
company that was the undisputed leader in quality.
4. Evaluation of Possible Future Strategies for the
Company:
The main strategic issue for Toyota is maintaining its position as the world’s leading
car manufacturer after the recent mass vehicle recall.
4.1 Future Strategies for Culture Change –
Based on the book titled “7 Lessons for Leading in Crisis” written by George (2009),
Toyota needs a credible leader with a strong, cohesive plan (George, 2010).
4.1.1 Face reality, starting with yourself – Toyota blamed the problems on stuck floor
mats and panicky drivers. Instead, Toyota should acknowledge that its vaunted

quality system failed. CEO Toyoda should take personal responsibility by saying that
he pushed too hard for growth and neglected quality.
4.1.2 Don’t be Atlas; Get the world off your shoulders – Toyoda needs a crisis team
reporting directly to him, working 24/7 to get problems fixed permanently. He
should add the world’s top quality experts to his fix it team and listen carefully to
their advice.
4.1.3 Dig deep for the root cause – Management should have required its best
engineers to get to the root cause of this problem and every other quality problem
being reported.
4.1.4 Get ready for the long haul – These problems won’t just fade away. In fact, they
are likely to get worst before getting better. Toyota must invest heavily in corrective
actions while its sales shrink and profits implode, requiring major cash resources until
its reputation can be restored.
4.1.5 Never waste a good crisis – For all the pain Toyota is experiencing, this crisis
provides a unique opportunity to make fundamental changes required to restore
Toyota quality. Employees are ready for new direction, and they are willing to make
radical changes to renew the company. With Toyoda’s leadership, Toyota
automobiles can be restored to the world’s highest quality.
4.1.6 You’re in the spotlight: Follow True North – Toyoda must come out of hiding,
take personal responsibility, and subject himself to intense questioning by regulators
and the media. Then he should make a personal commitment to every Toyota
customer to repair the damage, including buying back defective cars.
4.1.7 Go on offense; focus on winning now – Coming out of this crisis, the market will
never look the same. Toyota cannot wait until all its quality problems are resolved. It
must play defense and offense simultaneously. To win, Toyota has to offer advanced
features and superior quality, better value for consumers, greater safety, and
improved fuel efficiency.
4.2 Future Strategies for Innovation –
Like Volkswagen, Toyota could design cars for specific markets (Welch, 2010).
Penetration of the price sensitive Indian market could be achieved by producing its
low cost car soon (The Economic Times, 2010). Toyota needs to pay more attention
to the Chinese market, which is the largest and fastest growing. As Chinese families
are smaller than their Western equivalents, this could be an opportunity for increased
sales of the smaller Camry model (Xinhua, 2010). Retracting in Europe could fund
expansion into these blossoming Asian markets. Specific markets could also be
entered by joint ventures with local manufacturers. Volkswagen is aiming to do this